DB mirroring Setup

SQL 2005 Standard/Windows 2003 R2
Servers not in domain environment but they are in DMZ zone.
SQLSERVICE runs on localsystem account
Not default port

This is a two dual core machine with hyper threading. We cloned this machine and put another server in our hot standby data center. Principal is the server in our main data center both mirror and witness are located on the same machine in our hot standby data center. Principal and mirror are running on standard and witness is running on sqlexpress version.

Steps to configure for outbound connections on all three instances:

In a master database, create a database master key
In a master database, create an encrypted certificate for server instance
Create endpoint for server instance using it#%92s certificate
Backup certificate to a file and copy the file to the other server

Steps to configure for inbound connections on all three instances:

Create login for the other system
Create user from this login
Obtain certificate for mirroring endpoint of the other server instances
Associate the certificate with the user created.
Grant connect permission on the login for the mirroring endpoint

However, when I tried to setup partner and mirror, the partner could not find the mirror. I was able to ping, telnet for communications between these two servers.